The Institutional Conditions of Labour Market Risks: A Fuzzy-set Analysis of Long-term Unemployment and non-standard Employment in 18 OECD Countries

This paper attempts to answer: what are the institutional conditions for labour market risks? It investigates how institutional conditions cause labour market risk using four policies, employment protection legislation for permanent workers, for temporary workers, a statutory minimum wage, and the net replacement rate for long-term unemployment. These are analyzed to examine how these conditions combine to have an impact on long-term unemployment rates and non-standard employment rates in Korea, Japan, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Norway, Spain, Sweden, United Kingdom and the United States during the period of 2001 to 2008 (8 time points). Institutionalism including the Varieties of Capitalism (VOC) literature (Hall and Soskice 2001, Estevez-Abe, Iversen and Soskice 2001) provides a useful theoretical background to this study in investigating how different institutions have various ramifications for labour market risks. The study demonstrates that fs/QCA is capable of taking an institutional approach with a large number of cases. In the analysis of institutions as a causal condition for the existence of labour market risks, it is suggested that certain institutional arrangements result in a high rate of non-standard employment or long-term unemployment. The result suggests that there are multiple pathways to the same outcome which Ragin (2008) terms as different 'recipes'. This study demonstrates how institutions can be examined as a configuration using fuzzy-set qualitative comparative analysis and tests empirically how different institutional configurations cause labour market risk. Lastly, the paper highlights the importance of examining multiple policies together.